West Ham United may take a £4m hit after the collapse of their shirt sponsor, XL, midway through a three-year deal, it emerged yesterday.

XL Airways collapsed yesterday with debts of £143m, leaving West Ham in search of a replacement partner after losing out on the remainder of a deal understood to be worth between £3m and £4m a year. The club last night suspended all sales of their replica shirts and will play at West Bromwich Albion today in an unbranded strip. "West Ham United have taken the decision to immediately terminate their relationship with XL Holidays," said a statement on West Ham's website.

"In view of this, the club have suspended all sales of replica shirts until further notice. This will also involve in due course the removal of XL Holidays branding from all West Ham United platforms."

At a time when the club has been criticised by its own fans over the appointment as manager of the former Chelsea player Gianfranco Zola, directors are aware of the sensitivity of reissuing replica shirts missing the sponsor's logo when supporters have already forked out for new kit at the beginning of the season.

Despite widespread interest in sponsoring the club, West Ham has still not taken the decision over whether to accept new offers. The Hammers' financial director, Nick Igoe, yesterday insisted that Zola's transfer ambitions will not be affected by the off-the-field events.

"We are in an excellent financial state," said Igoe. "This is unfortunate timing - we did our dealings in the summer as it is prudent to do. But we had some wind of this and we have been talking to people about the possibility of replacing XL. We will now begin to accelerate that."

After selling Anton Ferdinand, George McCartney, Bobby Zamora and John Paintsil in the summer, West Ham will further reduce their squad in January. However, they insist that this decision lies with Zola and is not linked to the sponsorship issue and intend pursuing Jose Mourinho's former assistant Steve Clarke.

Though their resources are sufficient, Zola is uncomfortable with a squad of 26 outfield players. However, if any big-name players are to leave Upton Park during the winter transfer window, reinvestment will be made, the club says.

Those in Iceland who control West Ham's purse insist the club remains well-funded. "There has been a £30m investment from the owner [Bjorgolfur Gudmundsson] to fund the playing squad," said Igoe. "That is a big, big commitment."